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Dividends play an important role in compounding returns in the long run and end up forming a sizeable part of investment returns. Historically, Compagnie des Alpes SA (EPA:CDA) has been paying a dividend to shareholders. Today it yields 1.8%. Let’s dig deeper into whether Compagnie des Alpes should have a place in your portfolio.

Check out our latest analysis for Compagnie des Alpes

5 questions I ask before picking a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is its annual yield among the top 25% of dividend-paying companies?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has it increased its dividend per share amount over the past?

• Is is able to pay the current rate of dividends from its earnings?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

How does Compagnie des Alpes fare?

The current trailing twelve-month payout ratio for the stock is 30.7%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 30.3%, leading to a dividend yield of around 2.4%. Furthermore, EPS should increase to €2.21.

When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. A business with strong cash flow can sustain a higher divided payout ratio than a company with weak cash flow.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. Not only have dividend payouts from Compagnie des Alpes fallen over the past 10 years, it has also been highly volatile during this time, with drops of over 25% in some years. These characteristics do not bode well for income investors seeking reliable stream of dividends.

Compared to its peers, Compagnie des Alpes produces a yield of 1.8%, which is on the low-side for Hospitality stocks.

Next Steps:

Taking all the above into account, Compagnie des Alpes is a complicated pick for dividend investors given that there are a couple of positive things about it as well as negative. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three key aspects you should look at: